IDEAS home Printed from https://ideas.repec.org/p/fpr/fprevi/8.html
   My bibliography  Save this paper

The expected benefits of trade liberalization for world income and development: Opening the “black box” of global trade modeling

Author

Listed:
  • Bouet, Antoine

Abstract

"Trade liberalization is expected to act positively on world economic development and poverty alleviation, both of which have become high priorities of the international community. This emphasis explains why numerous studies have focused on assessing the expected benefits of trade liberalization on development. The main empirical tools for these assessments have been the use of spatial and nonspatial partial equilibrium models, gravity equations, and single- and multicountry computable general equilibrium models (CGEMs). Multicountry CGEMs, however, have produced strikingly divergent results. As demonstrated by recent studies, the associated increase in world welfare from full trade liberalization ranges from 0.2 to 3.1 percent—results that differ by a factor of 15! The objective of this study is to examine the efficiency of trade modeling in capturing the benefits from trade liberalization. It provides a survey of methodologies utilized to assess the impact of trade liberalization, putting an emphasis on multicountry CGEMs, and examines the extent to which such assessments diverge. The survey also demonstrates the benefits of “complementary analysis,” which utilizes different methodologies to study a specific topic. The report presents global modeling results using a general equilibrium model—the modeling international relations under applied general equilibrium (MIRAGE) model—the results of which are compared to those obtained in recent studies. Using the MIRAGE model,1 full trade liberalization is estimated to increase world real income by US$100 billion (+0.33 percent) after 10 years of implementation. This trade reform would be development-friendly, as it entails a larger growth rate of real income for developing countries and especially for least-developed countries." "Authors' Abstract

Suggested Citation

  • Bouet, Antoine, 2008. "The expected benefits of trade liberalization for world income and development: Opening the “black box” of global trade modeling," Food policy reviews 8, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:fprevi:8
    as

    Download full text from publisher

    File URL: http://www.ifpri.org/sites/default/files/publications/pv08.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters, in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314, World Scientific Publishing Co. Pte. Ltd..
    2. Joaquim Oliveira Martins & Stefano Scarpetta & Dirk Pilat, 1996. "Mark-Up Ratios in Manufacturing Industries: Estimates for 14 OECD Countries," OECD Economics Department Working Papers 162, OECD Publishing.
    3. World Bank, 2002. "Global Economic Prospects and the Developing Countries 2002," World Bank Publications - Books, The World Bank Group, number 14050, December.
    4. Patrick A. Messerlin, 2001. "Measuring the Costs of Protection in Europe: European Commercial Policy in the 2000s," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 102, October.
    5. T. Takayama, 1967. "International Trade And Mathematical Programming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 11(1), pages 36-48, June.
    6. Howard J. Wall, 1999. "Using the gravity model to estimate the costs of protection," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 33-40.
    7. Reimer, Jeffrey J., 2002. "Estimating the poverty impacts of trade liberalization," Policy Research Working Paper Series 2790, The World Bank.
    8. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
    9. Takayama, T., 1967. "International Trade And Mathematical Programming," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 11(1), pages 1-13, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cesar Revoredo-Giha & George Philippidis & Luiza Toma & Alan Renwick, 2013. "The Impact of EU Export Refunds on the African Continent: An Impact Assessment," Journal of Development Studies, Taylor & Francis Journals, vol. 49(12), pages 1651-1675, December.
    2. Gustavo HERNÁNDEZ, 2013. "Una resena de los efectos del Tratado de Libre Comercio entre Colombia y Estados Unidos," Archivos de Economía 11204, Departamento Nacional de Planeación.
    3. Hoang, Hoa K. & Meyers, William H., 2015. "Price stabilization and impacts of trade liberalization in the Southeast Asian rice market," Food Policy, Elsevier, vol. 57(C), pages 26-39.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bouët, Antoine, 2006. "What can the poor expect from trade liberalization?: opening the "black box" of trade modeling," MTID discussion papers 93, International Food Policy Research Institute (IFPRI).
    2. Kym Anderson, 2005. "On the Virtues of Multilateral Trade Negotiations," The Economic Record, The Economic Society of Australia, vol. 81(255), pages 414-438, December.
    3. Kym Anderson, 2003. "Trade Liberalization, Agriculture, and Poverty in Low-income Countries," WIDER Working Paper Series DP2003-25, World Institute for Development Economic Research (UNU-WIDER).
    4. Anderson, Kym, 2004. "The Challenge of Reducing Subsidies and Trade Barriers," CEPR Discussion Papers 4592, C.E.P.R. Discussion Papers.
    5. Chad E. Hart & John C. Beghin, 2004. "Rethinking Agricultural Domestic Support under the World Trade Organization," Center for Agricultural and Rural Development (CARD) Publications 04-bp43, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    6. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    7. Lionel Fontagné & Thierry Mayer & Soledad Zignago, 2005. "Trade in the Triad: how easy is the access to large markets?," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1401-1430, November.
    8. Chitiga, Margaret & Kandiero, Tonia & Mabugu, Ramos, 2005. "A Computable General Equilibrium Micro-Simulation Analysis of the Impact of Trade Policies on Poverty in Zimbabwe," Conference papers 331388, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Grabiella Berloffa & Maria Luigia Segnana, 2004. "Trade, inequality and pro-poor growth: Two perspectives, one message?," Department of Economics Working Papers 0408, Department of Economics, University of Trento, Italia.
    10. World Bank, 2007. "Kenya : Unleashing the Potential for Trade and Growth," World Bank Publications - Reports 7999, The World Bank Group.
    11. Omar Feraboli, 2012. "Preferential vs. Full Trade Liberalisation: A Dynamic CGE Model with Heterogeneous Households for Jordan," Working Paper series 08_12, Rimini Centre for Economic Analysis.
    12. Vincent Leyaro & Oliver Morrissey, 2010. "Protection and the Determinants of Household Income in Tanzania 1991 – 2007," Discussion Papers 10/03, University of Nottingham, CREDIT.
    13. Gallagher, Paul W. & Shapouri, Hosein & Price, Jeffrey, 2006. "Welfare maximization, pricing, and allocation with a product performance or environmental quality standard: Illustration for the gasoline and additives market," International Journal of Production Economics, Elsevier, vol. 101(2), pages 230-245, June.
    14. Nordås, Hildegunn Kyvik & Piermartini, Roberta, 2004. "Infrastructure and trade," WTO Staff Working Papers ERSD-2004-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    15. Giordano, Paolo & Li, Kun, 2012. "An Updated Assessment of the Trade and Poverty Nexus in Latin America," IDB Publications (Working Papers) 4209, Inter-American Development Bank.
    16. Kyoji Fukao & Goushi Kataoka & Arata Kuno, 2003. "How to Measure Non-tariff Barriers? A Critical Examination of the Price-Differential Approach," Hi-Stat Discussion Paper Series d03-08, Institute of Economic Research, Hitotsubashi University.
    17. Valenzuela, Ernesto & Hertel, Thomas W. & Ivanic, Maros & Nin Pratt, Alejandro, 2004. "Evaluating Poverty Impacts of Globalization and Trade Policy Changes on Agricultural Producers," 2004 Annual meeting, August 1-4, Denver, CO 20242, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. I-Hui Cheng & Howard J. Wall, 2005. "Controlling for heterogeneity in gravity models of trade and integration," Review, Federal Reserve Bank of St. Louis, vol. 87(Jan), pages 49-63.
    19. Anderson, Edward, 2020. "The impact of trade liberalisation on poverty and inequality: Evidence from CGE models," Journal of Policy Modeling, Elsevier, vol. 42(6), pages 1208-1227.
    20. repec:hal:spmain:info:hdl:2441/10189 is not listed on IDEAS
    21. Epo, Boniface Ngah & Abiala, Mireille Ambiana & Maimo, Clovis Wendji & Choub, Péguy Christophe Faha, 2010. "Globalization, Institutions, Asset Endowments and Poverty Reduction Outcomes in Africa within the Context of the Financial Crisis: Establishing a Transmission Mechanisms," MPRA Paper 20655, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fpr:fprevi:8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ifprius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.